What Happened?
Shares of freight delivery company XPO (NYSE: XPO) jumped 3% in the afternoon session after the company released August operating data that showed an easing in tonnage declines and reaffirmed its third-quarter guidance.
The company reported that its less-than-truckload (LTL) tonnage per day decreased by 4.7% year-over-year, which was a slight improvement from the decline seen in July and better than seasonal trends. The drop was attributed to a 3.4% decrease in shipments per day and a 1.3% fall in weight per shipment. Despite the volume decrease, XPO maintained its third-quarter margin guidance. This suggests to investors that the company's pricing strategies and operational efficiencies are successfully navigating a softer demand environment, with the moderating tonnage decline seen as a sign of stabilization.
After the initial pop the shares cooled down to $129.30, up 2.8% from previous close.
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What Is The Market Telling Us
XPO’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 23 days ago when the stock gained 5.1% as an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers.
Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.
XPO is down 2.4% since the beginning of the year, and at $129.30 per share, it is trading 18.3% below its 52-week high of $158.20 from December 2024. Investors who bought $1,000 worth of XPO’s shares 5 years ago would now be looking at an investment worth $1,478.
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